Don’t Qualify for a Loan Modification? Consider a Short Sale
By Sandy Flores
Instructor in real estate in the Santa Ana College
If you have made many attempts to get a loan modification and was unable to come to any reasonable agreement that convince you, maybe the change is not the process that you would have the option to request a short sale or “short sale “and thus avoid the foreclosure process.
Selling short running occurs when the balance you owe the bank exceeds the current property value in today’s real estate market, including all of the expenditure of sale.
If you meet certain requirements, banks could approve the short sale of your home, agreeing to accept less than the full balance of your debt. Note that not all lenders will accept short sales or discounted payoffs, especially if you have more financial sense to do otherwise.
The short sale is a complex type of sale items. The circumstances that cause these types of sales are delicate and not easy for the owner. The short sale is one alternative for those borrowers who do not meet the requirements set by the Stability Programme and Capacity to Pay Homeowners in a Modification or English Home Affordable Modification Program (HAMP), but can can apply Program for Avoiding Foreclosure Alternatives (HAFA, by its acronym in English).
“We are announcing measures for a short sale process through a voluntary transfer of property that helps owners save money and protect their financial future,” about U.S. Treasury Secretary Timothy Geithner.
HAMP offers incentives to borrowers, servers and investors to encourage short sales and enable families and servers avoid the foreclosure process, which is very expensive. In the same way we want to minimize the negative impact of foreclosures on borrowers, financial institutions and communities.
Short sales are transactions that are processed with careful coordination and close cooperation between a number of parts: servers, appraisers, borrowers, buyers, realtors, title agents and mortgage insurers, as well as holders of second loans or lines of home equity. A short sale provides a better outcome for borrowers, investors and communities.
HAFA simplifies and streamlines the short sale process providing procedures, deadlines, and standard documentation and effective.
Selling your property in short sale gives you some control with self-monitoring of the sales process. You can stop making mortgage payments, unless you elect to continue making them.
You can meet the new owners on better terms. Also comply with the requirements under the rules of Fannie Mae, to buy another home in two years instead of five to seven years if your credit report reflects “repossession”.
If your bank approves the short sale, it has the right to issue a 1099 for the difference, due to a provision in the code of the Internal Revenue Service (IRS, for its acronym in English) about forgiveness of debt. But if you meet the requirements to apply for IRS Tax Relief, you may exclude the payment of these taxes under the law of the Mortgage Forgiveness Debt. You can get more information on the web at www.irs.gov / Spanish
As is always advisable to seek advice from a professional with experience and knowledge in this type of sales to help determine and make a more informed decision and advantageous for you.